Market Remarks

Morning Notes – Thursday November 7, 2019

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day with good chance of sideways move from current level – watch for break below 3078.00 for change of fortune
  • Key economic data due:
    • Unemployment Claims ( 211K vs. 215K ; prev. 219K ) at 8:30 AM

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Confirmed Uptrend
  • 120-Min: Up
  • 30-Min: Up-Side-Up
  • 15-Min: Side-Up
  • 6-Min: Side

Key Levels:

  • Critical support levels for S&P 500 are 3065.89, 3050.72 and 3038.66
  • Critical resistance levels for S&P 500 are 3085.20, 3093.90 and 3100.00
  • Key levels for eMini futures: break above 3092.50, the high of 2:30 AM and break below 3085.25, the low of 3:00 AM

Pre-Open

  • On Wednesday, at 4:00 PM, S&P future closed at 3074.00 and the index closed at 3076.78 – a spread of about -2.75 points; futures closed at 3075.50 for the day; the fair value is -1.50
  • Pre-NYSE session open, futures are higher – at 8:30 AM, S&P 500 futures were up by +12.75; Dow down by +156 and NASDAQ by +39.75

Markets Around The World

  • Markets in the East closed higher
  • European markets are mostly higher – Switzerland is lower
  • Currencies:
    Up Down
    • EUR/USD
    • GBP/USD
    • USD/JPY
    • AUD/USD
    • NZD/USD
    • Dollar index
    • USD/CHF
    • USD/CAD
    • INR/USD
  • Commodities:
    Up Down
    • Crude Oil
    • Copper
    • Palladium
    • Platinum
    • Cotton
    • Cocoa
    • NatGas
    • Gold
    • Silver
    • Sugar
    • Coffee
  • Bonds
    • 10-yrs yield closed at 1.814%, down from November 5 close of 1.866%;
    • 30-years is at 2.297%, down from 2.348%
    • 2-years yield is at 1.613%, down from 1.629%
    • The 10-Year-&-2-Year spread is at 0.201 down from 0.237
  • VIX
    • Is at 12.51 down from November 6 close of 12.62; above 5-day SMA 12.67
    • Recent high was 13.95 on October 31; recent low was 12.19 on October 31

The trend and patterns on various time frames for S&P 500:

Monthly
  • Uptrend resumed
  • September was a green candle with small upper shadow and lower shadow longer than the real body
    • Stochastic %K is above %D and above 90
    • RSI-9 is breaking above a downtrend line from January 2018 high;
    • Rising to the upper band from near the middle band of the 120-month regression channel
  • Sequence of higher highs and higher lows since February 2016 is broken in December since then a new high has been made in May 2019
Weekly:
  • The week ending on November 1 was a large green candle with almost no upper shadow and small lower shadow
    • At the upper bound of a broadening pattern
    • Stochastic (9,1, 3): %K is above %D; above 90;
    • RSI (9) has turned up and near 70
  • Last week was up +44.36 or +1.5%; the 5-week ATR is 73.63
  • Last week’s pivot point=3052.35, R1=3081.51, R2=3096.11; S1=3037.75, S2=3008.59; R1/R2 pivot levels were breached
  • An up week; fourth in last five weeks and seventh in last ten weeks
  • Last swing low, 2728.81, was the low on June 3, 2018; last swing high was 3027.98, made during the week of July 22
  • Above 10-week EMA; above 39-week SMA and 89-week SMA
  • Uptrend
Daily
  • A small doji candle with small lower and smaller upper shadow
    • %K is crisscrossing %D above 80
    • RSI-9 is below 8-day SMA
  • Broke above a symmetrical triangle, that resembles an ascending triangle, on October 25;
    • Upper bound 3027.98 and lower bound 2898.07; max height almost 130; break point is 3016.00; futures are approaching the 61.8% extension target near 3096.00; the 100% extension target is near 3146.00;
  • Above 20-day EMA, 50-day EMA, 100-day SMA and 200-day SMA;
  • Uptrend
2-Hour (e-mini future)
  • Drifting mostly sideways to up since 8:00 AM on Monday within a 30 point band; bias changed from down to up overnight; uptrend since October 9
    • RSI-21 near 70 after dropping near 50 at 10:00 AM on Tuesday after moving along 70 since 2:00 PM on November 1
    • %K is crisscrossing %D higher
  • Above 20-bar EMA, which is above EMA10 of EMA50
  • Bias: Up
30-Minute (e-mini future)
  • Moving sideways to up since 5:00 AM on Monday
    • RSI-21 moving around 65 since 2:30 AM
    • %K crossed above %D at 7:30 AM from near 30
    • Above EMA10 of EMA50, which is above 30-bar EMA
  • Bias: Up-Side-Up
15-Minute (e-mini future)
  • Bollinger Band (20, 2.0) has moved sideways from 10:15 PM on November 5 to 2:00 AM; moving up since
  • The Bollinger Band was narrow from Tuesday to 2:00 AM; expanding since with price walking up the upper band
  • Stochastic (9, 1, 3): %K is crisscrossing %D
  • Bias: Side-Up

Previous Session

Most major U.S. indices closed mostly lower on Wednesday, November 6 in mixed volume. S&P 500 and NYSE Composite closed higher. Dow Jones Industrial Average and Dow Jones Transportation Average traded in higher volume. The day’s price action was sideways or indecisive and the range was relatively small.

From Briefing.com:

The stock market closed little changed on Wednesday, marking its second straight pause near record highs as investors digested a possible pushback in the timeline for a trade deal. The S&P 500 (+0.1%), Dow Jones Industrial Average (unch), and Nasdaq Composite (-0.3%) closed within 0.3% of their flat lines, while the Russell 2000 (-0.6%) underperformed.

[…]

The S&P 500 energy sector, however, did succumb to a 2.3% pullback following disappointing earnings results and guidance from Diamondback Energy (FANG 77.20, -13.03, -14.4%) and a decline in oil prices ($56.35, -0.89, -1.6%). The Philadelphia Semiconductor Index (-0.8%) also gave back some gains in response to Microchip’s (MCHP 95.62, -4.40, -4.4%) results and guidance and perhaps amid a more cautious trade outlook.

On the other hand, the financials sector (+0.4%) provided the broader market some influential support. The health care (+0.6%), consumer staples (+0.5%), and real estate (+0.5%) sectors also outperformed, likely benefiting from their defensive-oriented dispositions.

[…]

U.S. Treasuries finished the session on a higher note, having received increased demand following the latest trade update. The 2-yr yield declined three basis points to 1.60%, and the 10-yr yield declined five basis points to 1.81%. The U.S. Dollar Index remained little changed at 97.95.

[…]

• Nonfarm business sector labor productivity declined 0.3% in the third quarter (Briefing.com consensus +1.0%), according to the BLS, after increasing an upwardly revised 2.5% (from 2.3%) in the second quarter. Unit labor costs jumped 3.6% (Briefing.com consensus +2.1%) after increasing a downwardly revised 2.4% (from 2.6%) in the second quarter.
o The key takeaway from the report is that it points to profit margin pressures for businesses with the decline in productivity and the jump in unit labor costs; it is also the first decline in productivity since the fourth quarter of 2015.
• The weekly MBA Mortgage Applications Index ticked down 0.1% following a 0.6% increase in the prior week.

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